Accounting final
A distinguishing feature of managerial accounting is A) external users. B) general-purpose reports. C) very detailed reports. D) quarterly and annual reports.
C
Which of the following will always be a relevant cost? A) Sunk cost B) Fixed cost C) Variable cost D) Opportunity cost
D
. The last step in activity-based costing is to A) assign overhead costs to products, using overhead rates determined for each cost pool. B) compute the activity-based overhead rate per cost driver. C) identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools. D) identify the cost driver that has a strong correlation to the activity cost pool.
A
A company budgeted unit sales of 204,000 units for January, 2013 and 240,000 units for February 2013. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 61,200 units of inventory on hand on December 31, 2012, how many units should be produced in January, 2013 in order for the company to meet its goals? A) 214,800 units B) 204,000 units C) 193,200 units D) 276,000 units
A
Both direct materials and indirect materials are A) raw materials. B) manufacturing overhead. C) merchandise inventory. D) sold directly to customers by a manufacturing company.
A
For Jacobs Company, the predetermined overhead rate is 70% of direct labor cost. During the month, $300,000 of factory labor costs are incurred of which $70,000 is indirect labor. Actual overhead incurred was $160,000. The amount of overhead debited to Work in Process Inventory should be: A) $161,000 B) $160,000 C) $210,000 D) $230,000
A
If a company had a contribution margin of $750,000 and a contribution margin ratio of 40%, total variable costs must have been A) $1,125,000. B) $450,000. C) $1,875,000. D) $300,000.
A
If the company has a policy of maintaining a minimum end of the month cash balance of $400,000, the amount the company would have to borrow is A) $160,000. B) $80,000. C) $240,000. D) $96,000.
A
It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. A foreign wholesaler offers to purchase 3,000 scales at $15 each. Garner would incur special shipping costs of $1 per scale if the order were accepted. Garner has sufficient unused capacity to produce the 3,000 scales. If the special order is accepted, what will be the effect on net income? A) $6,000 increase B) $6,000 decrease C) $9,000 decrease D) $45,000 increase
A
Montoya Manufacturing has fixed costs of $2,500,000 and variable costs are 40% of sales. What are the required sales if Montoya desires net income of $250,000? A) $4,583,333 B) $4,166,667 C) $6,875,000 D) $6,250,000
A
Postings to control accounts in a costing system are made A) monthly. B) daily. C) annually. D) semi-annually.
A
Ramirez Corporation sells two types of computer chips. The sales mix is 30% (Q-Chip) and 70% (Q-Chip Plus). Q-Chip has variable costs per unit of $60 and a selling price of $100. Q-Chip Plus has variable costs per unit of $70 and a selling price of $130. Ramirez's fixed costs are $540,000. How many units of Q-Chip would be sold at the break-even point? A) 3,000 B) 3,522 C) 5,000 D) 7,000
A
The CVP income statement classifies costs as variable or fixed and computes a contribution margin. A) True B) False
A
The additional profit that would result from processing rough lumber further is A) $21,400. B) $49,600. C) $145,400. D) $95,800.
A
The entry to record the cost of factory labor and the associated payroll tax expense will include a debit to Factory Labor for A) $540,000. B) $490,000. C) $470,000. D) $440,000.
A
The flow of costs in a job order cost system A) involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done. B) cannot be measured until all jobs are complete. C) measures product costs for a set time period. D) generally follows a LIFO cost flow assumption.
A
The total direct materials needed for production is A) 21,000 pounds. B) 5,800 pounds. C) 15,200 pounds. D) 132,200 pounds.
A
Using the high-low method, how much is the cost per machine hour? A) $1.50 B) $2.25 C) $1.69 D) $1.34
A
Weatherspoon Company has a product with a selling price per unit of $200, the unit variable cost is $90, and the total monthly fixed costs are $300,000. How much is Weatherspoon's contribution margin ratio? A) 55% B) 45% C) 150% D) 222%
A
Which of the following would be the least controllable fixed costs? A) Property taxes B) Rent C) Research and development D) Management training programs
A
Which of the following would not be considered an example of a discontinued operation? A) Shifting production processes within an operation B) Elimination of a major class of customers C) Elimination of an entire activity D) Disposal of a significant component of a business
A
Which one of the following best describes a job cost sheet? A) It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job. B) It is used to track manufacturing overhead costs to specific jobs. C) It is used by management to understand how direct costs affect profitability. D) It is a daily form that management uses for tracking worker productivity on which employee raises are based.
A
. Boswell company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $270,000. What is Boswell's contribution margin ratio? A) 68%. B) 45%. C) 32%. D) 55%.
B
If 2013 is the base year, what is the percentage increase in sales from 2013 to 2014? A) 60% B) 20% C) 120% D) 160%
B
. Why are budgets useful in the planning process? A) They provide management with information about the company's past performance. B) They help communicate goals and provide a basis for evaluation. C) They guarantee the company will be profitable if it meets its objectives. D) They enable the budget committee to earn their paycheck.
B
A budget A) is a substitute for management. B) is an aid to management. C) can operate or enforce itself. D) is the responsibility of the accounting department.
B
A company has a process that results in 24,000 pounds of Product A that can be sold for $8 per pound. An alternative would be to process Product A further at a cost of $160,000 and then sell it for $14 per pound. Should management sell Product A now or should Product A be processed further and then sold? What is the effect of the action? A) Process further, the company will be better off by $16,000. B) Sell now, the company will be better off by $16,000. C) Process further, the company will be better off by $144,000. D) Sell now, the company will be better off by $160,000.
B
A company has contribution margin per unit of $90 and a contribution margin ratio of 40%. What is the unit selling price? A) $150 B) $225 C) $36 D) Cannot be determined
B
A major accounting contribution to the managerial decision-making process in evaluating possible courses of action is to A) assign responsibility for the decision. B) provide relevant revenue and cost data about each course of action. C) determine the amount of money that should be spent on a project. D) decide which actions that management should consider.
B
An extraordinary item must meet which of the following two criteria? A) Foreseeable and material B) Infrequent and unusual C) Substantial and measurable D) Unusual and measurable
B
As current technology changes manufacturing processes, it is likely that direct A) labor will increase. B) labor will decrease. C) materials will increase. D) materials will decrease
B
Cost of raw materials is debited to Raw Materials Inventory when the A) materials are ordered. B) materials are received. C) materials are put into production. D) bill for the materials is paid.
B
For Buffalo Co., at a sales level of 5,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000. What is the contribution margin per unit? A) $4.20 B) $5.00 C) $10.00 D) $15.00
B
For Wilder Corporation, sales is $1,200,000 (6,000 units), fixed expenses are $360,000, and the contribution margin per unit is $80. What is the margin of safety in dollars? A) $60,000 B) $300,000 C) $540,000 D) $840,000
B
For the Assembly Department, unit materials cost is $8 and unit conversion cost is $12. If there are 10,000 units in ending work in process 75% complete as to conversion costs, the costs to be assigned to the inventory are A) $200,000. B) $170,000. C) $150,000. D) $180,000.
B
If contribution margin is $120,000, sales is $300,000, and net income is $40,000, then variable and fixed expenses are Variable Fixed A) $180,000 $260,000 B) $180,000 $80,000 C) $80,000 $180,000 D) $420,000 $260,000
B
Managerial accounting information A) pertains to the entity as a whole and is highly aggregated. B) pertains to subunits of the entity and may be very detailed. C) is prepared only once a year. D) is constrained by the requirements of generally accepted accounting principles.
B
Margin of safety in dollars is A) expected sales divided by break-even sales. B) expected sales less break-even sales. C) actual sales less expected sales. D) expected sales less actual sales.
B
O'Malley Company sells 100,000 units for $13 a unit. Fixed costs are $350,000 and net income is $250,000. What should be reported as variable expenses in the CVP income statement? A) $600,000. B) $700,000. C) $950,000. D) $1,050,000.
B
Of the following items, which one is not obtained from an individual operating budget? A) Selling and administrative expenses B) Accounts receivable C) Cost of goods sold D) Sales
B
Overhead applied to Regular using traditional costing using direct labor hours is A) $1,075,000. B) $1,500,000. C) $2,250,000. D) $2,675,000.
B
Sitwell is considering switching from one overhead rate based on labor hours to activity-based costing. Total overhead costs assigned to titanium racquets, using a single overhead rate, are A) $60,000. B) $63,000. C) $75,000. D) $84,000.
B
The manufacturing overhead consists of $16,000 of costs that will be eliminated if the components are no longer produced by Mallory. From Mallory's point of view, how much is the incremental cost or savings if the widgets are bought instead of made? A) $18,000 incremental savings B) $6,000 incremental cost C) $2,000 incremental savings D) $18,000 incremental cost
B
The two basic types of cost accounting systems are A) job order and job accumulation systems. B) job order and process cost systems. C) process cost and batch systems. D) job order and batch systems.
B
Using vertical analysis, what percentage is assigned to cost of goods sold? A) 67% B) 33% C) 100% D) 30%
B
What effect will the unrealized gain on available for sales securities have on comprehensive income? A) No effect on comprehensive income. B) Increase of $800,000 in comprehensive income. C) Increase of $8,800,000 in comprehensive income. D) Decrease of $800,000 in comprehensive income.
B
Which of the following income statement figures would probably be the best indicator of a company's future performance? A) Total revenues B) Income from operations C) Net income D) Gross profit
B
Zibba Company enters materials at the beginning of the process. In January, there was no beginning work in process, but there were 200 units in the ending work in process inventory. The number of units completed equals the number of A) units started. B) units started less 200. C) units started plus 200. D) equivalent units.
B
A process cost accounting system is most appropriate when A) a variety of different products are produced, each one requiring different types of materials, labor, and overhead. B) the focus of attention is on a particular job or order. C) similar products are mass-produced. D) individual products are custom made to the specification of customers.
C
A process cost system would be used for all of the following products except A) chemicals. B) computer chips. C) motion pictures. D) soft drinks.
C
A process cost system would most likely be used by a company that makes A) motion pictures. B) repairs to automobiles. C) breakfast cereal. D) college graduation announcements.
C
A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed. Costs transferred out of the Baking Department will be transferred to: A) Finished Goods Inventory. B) Cost of Goods Sold. C) Work in Process—Packaging Department. D) Manufacturing Overhead.
C
Daffodil Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20,000 units annually. Planter is a low-volume item totaling only 6,000 units per year. Flower requires one hour of direct labor for completion, while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32,000 (20,000 + 12,000). Expected annual manufacturing overhead costs are $800,000. Daffodil uses a traditional costing system and assigns overhead based on direct labor hours. Each unit of Planter would be assigned overhead of A) $25.00. B) $30.77. C) $50.00. D) need more information to compute.
C
For its inspecting cost pool, Davidson, Inc. expected overhead cost of $300,000 and 4,000 inspections. The actual overhead cost for that cost pool was $360,000 for 5,000 inspections. The activity-based overhead rate used to assign the costs of the inspecting cost pool to products is A) $60 per inspection. B) $72 per inspection. C) $75 per inspection. D) $90 per inspection.
C
If 120,000 units are started into production there was no beginning work in process, and 40,000 units are in process at the end of the period, how many units were completed and transferred out? A) 120,000. B) 40,000. C) 80,000. D) 160,000.
C
If annual overhead costs are expected to be $800,000 and direct labor costs are expected to be $1,000,000, then if the activity base is direct labor costs: A) $1.25 is the predetermined overhead rate. B) for every dollar of manufacturing overhead, 80 cents of direct labor will be assigned. C) for every dollar of direct labor, 80 cents of manufacturing overhead will be assigned. D) a predetermined overhead rate cannot be determined.
C
Internal reports that review the actual impact of decisions are prepared by A) department heads. B) the controller. C) management accountants. D) factory workers.
C
Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period? A) 70,000. B) 7,000. C) 77,000. D) 63,000.
C
Moonwalker's CVP income statement included sales of 4,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $88,000. Contribution margin is A) $400,000. B) $240,000. C) $160,000. D) $72,000.
C
Simmons Inc. applies overhead to production at a predetermined rate of 90% based on direct labor cost. Job No. 250, the only job still in process at the end of August, has been charged with manufacturing overhead of $7,200. What was the amount of direct materials charged to Job 250 assuming the balance in Work in Process inventory is $30,000? A) $7,500. B) $8,000. C) $14,800. D) $30,000.
C
Sophie's Dog Supplies has income before taxes of $550,000 and an extraordinary loss of $170,000. If the income tax rate is 30% on all items, the income statement should show income before irregular items and an extraordinary loss, respectively, of A) $550,000 and ($170,000). B) $385,000 and ($86,700). C) $385,000 and ($119,000). D) $165,000 and ($51,000).
C
The Holiday House had severe damage done to its Christmas inventory due to an escaped circus monkey rampaging through the store. The inventory loss was $150,000 before applicable taxes of $30,000. The Holiday House should record the loss as a(n) A) $150,000 loss in other expenses and losses. B) $180,000 extraordinary loss. C) $120,000 extraordinary loss. D) $130,000 extraordinary loss
C
The basic similarities between job order cost and process cost systems include all of the following except the A) manufacturing cost elements. B) flow of costs. C) point at which costs are totaled. D) accumulation of the costs of materials, labor, and overhead.
C
The company has oven capacity of 1,200 hours. How much will contribution margin be if it produces only the most profitable product? A) $12,000 B) $16,000 C) $18,000 D) $24,000
C
The process of evaluating financial data that change under alternative courses of action is called A) double entry analysis. B) contribution margin analysis. C) incremental analysis. D) cost-benefit analysis.
C
The product cost that is most difficult to associate with a product is A) direct materials. B) direct labor. C) manufacturing overhead. D) advertising.
C
The wages of a timekeeper in the factory would be classified as A) a period cost. B) direct labor. C) indirect labor. D) compliance costs.
C
Which of the following is not a necessary step in preparing a production cost report? A) Compute the equivalent units of production. B) Compute the physical unit flow. C) Prepare the job order cost sheet. D) Prepare a cost reconciliation schedule.
C
Which of these best reflects a distinguishing factor between a job order cost system and a process cost system? A) The detail at which costs are calculated. B) The time period each covers. C) The number of work in process accounts. D) The manufacturing cost elements included.
C
Which one of the following characteristics would likely be associated with a just-in-time inventory method? A) Ending inventory of work in process that would allow several production runs B) A backlog of inventory orders not yet shipped C) Minimal finished goods inventory on hand D) An understanding with customers that they may come to the showroom and select from inventory on hand
C
. If there were 60,000 pounds of raw materials on hand on January 1, 120,000 pounds are desired for inventory at January 31, and 410,000 pounds are required for January production, how many pounds of raw materials should be purchased in January? A) 350,000 pounds B) 530,000 pounds C) 290,000 pounds D) 470,000 pounds
D
A CVP income statement would report A) gross profit of $160,000. B) contribution margin of $400,000. C) gross profit of $190,000. D) contribution margin of $190,000.
D
A budget period should be A) monthly. B) for a year or more. C) long-term. D) long enough to provide an obtainable goal under normal business conditions.
D
A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 80,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January? A) 88,000 equivalent units. B) 72,000 equivalent units. C) 60,000 equivalent units. D) 80,000 equivalent units.
D
Alvarez Company is considering the following alternatives: Alternative A Alternative B Revenues $50,000 $60,000 Variable costs 30,000 30,000 Fixed costs 10,000 16,000 What is the incremental profit? A) $10,000 B) $0 C) $6,000 D) $4,000
D
Austin Accounting Services estimates for next year revenues of $2,000,000, direct labor of $400,000, and overhead of $700,000. Under traditional costing, overhead is applied to audit jobs using the rate of A) 35% of revenues. B) 20% of revenues. C) 56% of direct labor. D) 175% of direct labor.
D
Baden Company manufactures a product with a unit variable cost of $100 and a unit sales price of $176. Fixed manufacturing costs were $480,000 when 10,000 units were produced and sold. The company has a one-time opportunity to sell an additional 1,000 units at $140 each in a foreign market which would not affect its present sales. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows: A) Income would decrease by $8,000. B) Income would increase by $8,000. C) Income would increase by $140,000. D) Income would increase by $40,000.
D
Direct labor is sometimes the appropriate basis for assigning overhead cost to products. It is appropriate to use direct labor when which of the following is true? (1) Direct labor constitutes a significant part of total product cost. (2) A high correlation exists between direct labor and changes in the amount of overhead costs. A) (1) only B) (2) only C) Either (1) or (2) D) Both (1) and (2)
D
Horizontal analysis is a technique for evaluating a series of financial statement data over a period of time A) that has been arranged from the highest number to the lowest number. B) that has been arranged from the lowest number to the highest number. C) to determine which items are in error. D) to determine the amount and/or percentage increase or decrease that has taken place.
D
If Ponszko's produces 2,300 units in August, how much is its total cost expected to be? A) $12,000 B) $59,400 C) $41,400 D) $53,400
D
If a firm increases its activity level, A) costs should remain the same. B) most costs will rise. C) no costs will remain the same. D) some costs will change, others will remain the same.
D
In a CVP income statement, cost of goods sold is generally A) completely a variable cost. B) completely a fixed cost. C) neither a variable cost nor a fixed cost. D) partly a variable cost and partly a fixed cost.
D
Lion Industries required production for June is 132,000 units. To make one unit of finished product, three pounds of direct material Z are required. Actual beginning and desired ending inventories of direct material Z are 300,000 and 330,000 pounds, respectively. How many pounds of direct material Z must be purchased? A) 378,000. B) 396,000. C) 408,000. D) 426,000.
D
Managerial accounting applies to each of the following types of businesses except A) service firms. B) merchandising firms. C) manufacturing firms. D) Managerial accounting applies to all types of firms.
D
Manufacturing costs include A) direct materials and direct labor only. B) direct materials and manufacturing overhead only. C) direct labor and manufacturing overhead only. D) direct materials, direct labor, and manufacturing overhead.
D
Moonwalker's CVP income statement included sales of 4,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $88,000. Net income is A) $400,000. B) $160,000. C) $152,000. D) $72,000.
D
Penner Company reported total manufacturing costs of $410,000, manufacturing overhead totaling $78,000, and direct materials totaling $96,000. How much is direct labor cost? A) Cannot be determined from the information provided. B) $584,000 C) $174,000 D) $236,000
D
Port Accounting performs tax services for Cathy Kane. Direct labor cost is $1,200; 600 CPU minutes were used; and 1 legal hour was used. What is the total cost of the Kane job using activity-based costing? A) $2,880 B) $3,000 C) $4,080 D) $4,200
D
Ratios are most useful in identifying A) trends. B) differences. C) causes. D) relationships.
D
Sitwell is considering switching from one overhead rate based on labor hours to activity-based costing.Using activity-based costing, how much inspections cost is assigned to titanium racquets? A) $22,500. B) $35,625. C) $37,500. D) $52,500.
D
The break-even point in dollars is A) $1,642,800. B) $10,325,582. C) $11,100,000. D) $12,000,000.
D
The costs incurred prior to the split-off point are referred to as A) separable costs. B) split-off costs. C) joint product costs. D) joint costs.
D
The discontinued operations section of the income statement refers to A) discontinuance of a product line. B) the income or loss on products that have been completed and sold. C) obsolete equipment and discontinued inventory items. D) the disposal of a significant component of a business.
D
The production budget shows expected unit sales of 32,000. Beginning finished goods units are 3,600. Required production units are 33,600. What are the desired ending finished goods units? A) 2,000 B) 3,600 C) 6,400 D) 5,200
D
Under just-in-time processing, all of the following are received or completed "just in time" except A) finished goods. B) raw materials. C) subassembly parts. D) supplies.
D
When a job is completed and all costs have been accumulated on a job cost sheet, the journal entry that should be made is A) Finished Goods Inventory Direct Materials Direct Labor Manufacturing Overhead B) Work In Process Inventory Direct Materials Direct Labor Manufacturing Overhead C) Raw Materials Inventory Work In Process Inventory D) Finished Goods Inventory Work In Process Inventory
D
Which of the following are period costs? A) Raw materials B) Direct materials and direct labor C) Direct labor and manufacturing overhead D) Selling expenses
D
Which of the following is not typical of traditional costing systems? A) Use of a single predetermined overhead rate. B) Use of direct labor hours or direct labor cost to assign overhead. C) Assumption of correlation between direct labor and incurrence of overhead cost. D) Use of multiple cost drivers to allocate overhead.
D
Which of the following is the best definition of sustainable income? A) Sustainable income is a measure of solvency that does not include capital expenditure. B) Sustainable income is the same as net income. C) Sustainable income is income that is unusual in nature and infrequent in occurrence. D) Sustainable income is the most likely level of income to be obtained in the future.
D
Which of the following items does not follow from the adoption of a budget? A) Promote efficiency B) Deterrent to waste C) Basis for performance evaluation D) Guarantee of accomplishing the profit objective
D